Getting flush – via the niche webs... [Link to TBO]

By : David Crow

11/15/2006

‘Rather than a mass customer base, advertising on these blogs gives lobbyists unbridled access to an extremely valuable audience: Britain’s political elite’

Anybody who still believes that a successful internet media strategy must involve emulating giant, mass-market websites such as Rupert Murdoch’s MySpace or Google’s YouTube, should think again. A more promising road is that being pursued by Barry Diller’s Interactive Corp, which is pouring vast resources into creating highly speci­alised, low-volume, sites aimed at niche audiences.

Diller’s pointman for this strategy is the former Channel 4 controller Michael Jackson, who is now being tipped to become the head of ITV, if it is eventually bought by NTL. For Jackson, this kind of ­venture already has a proven track record in the efforts of early cable television networks such as MTV and the sports channel ESPN. These networks followed a simple rule: target a small market.

Interactive Corp’s first venture of this type is Very Short List, an American arts and culture website which gives users cultural recommendations. Each day subscribers are sent an email suggesting a music track, book extract or video. Aimed at highbrow professionals, the site provides content to users who aren’t catered for on the mainstream web (previous suggestions have included an Icelandic composer and a book by Russian satirists).

Diller has given Jackson the ­go-ahead to spend hundreds of millions of dollars on dozens of other such sites, built around humour, news and popular culture. Their philosophy is inspired by the highly ­plausible view of the world – now dubbed the “long tail”, after Chris Anderson’s book exploring the ­phenomenon – which sees that internet culture is moving away from a small number of blockbuster hits towards many niches.

This new generation of websites will require strong marketing skills and an indepth knowledge of the audience. That information can then be sold to advertisers. More importantly, mechanisms are needed to make such advertising as easy as dealing with big-hitting sites.

In Britain, political blogs from all parts of the ideological spectrum, including ConservativeHome.com, Guido Fawkes, and Lib Dem Blogs, have teamed up with a new company, MessageSpace, to pursue this strategy. Started by Alex Hilton (who also launched Labour Home), the company sells advertising space across seven political blogs and uses the specialised appeal of its content as a unique selling point.

Rather than offering a mass ­cust­omer base, advertising on these blogs gives lobbyists and others un­bridled access to an extremely stream­lined and valuable audience: Britain’s political elite and those wor­king in the “Westminster village”.

MessageSpace claims to offer a banner advertisement in every political office in Britain. According to Hilton, MessageSpace sold out of banner space on Conservative sites well before the start of this year’s conference season.

Another US firm successfully pursuing this strategy is Connected Ventures, which aggregates advertising across a host of small sites all aimed at college students. Connected Ventures’ sites – which boast 8m unique visitors, 75% of whom are 18-24-year-olds – have virtually identical content to YouTube and MySpace, though with a more personal feel. By merging back-office functions, such as ads sales, they can still turn a profit.

Jackson’s latest foray into niche websites is a partnership with a left-of-centre US blogging website, The Huffington Post. Using a real-time news website with a satirical slant, the content aims to be a cross be­tween a small Google News and American TV’s The Daily Show, with Jon Stewart.

Innovative media companies are now beginning to offer real competition to Google Adsense, the industry giant used by sites of all sizes to display relevant Google ads on their online content pages – and earn money.

Jackson, Anderson and their equivalents in the emerging British commercial blogosphere all predict that the single-channel, general-entertainment approach on the net will become increasingly devalued in the face of niche competition. The implication is that Murdoch will find he made a costly mistake spending billions of dollars buying monolithic websites, when the net was about to fracture into thousands of smaller markets.

Again, the analogy with TV is ­crucial. The combined effect of Sky, Free­view, and cable television in Britain is having the same effect on traditional TV today – acting as a catalyst for the steady demise of the traditional broadcast networks.

ITV in particular has found it tough competing with rivals selling advertising across smaller channels for far less, while guaranteeing contact with the ad­vert­iser’s intended audience; the company launched a range of channels and started fighting the newcomers on their own ground, grabbing a new audience with ITV2, 3 and 4 to compensate for ITV1’s decline.

For British media firms the ­opp­ortunity to think big by going small and investing in small, targeted ­websites is still there. The advent of high-speed internet is best harnessed by focusing on small communities bound by common interests. Gen­eric and universal solutions that ignore consumer individuality will, like their TV counterparts, be left behind.